System Architecture

High-Level Overview

The BaseCase protocol implements a multi-phase prediction market system with the following component structure:

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Component Responsibilities

Frontend Layer

Component	Technology	Function
UI Framework	React 18	User interface rendering
State Management	React Context	Application state
Web3 Integration	Wagmi + Viem	Blockchain interaction
Build Tool	Vite	Development and production builds

Contract Layer

Contract	Responsibility
MarketFactory	Market creation and registry
ShadowMarket	Virtual CPMM, shadow accounting
GraduationManager	Token minting, distribution
OutcomeToken	ERC-20 YES/NO token contracts
OracleResolver	UMA Oracle integration

External Integrations

System	Purpose
ERC-20	Standard token interface
UMA Oracle	Decentralized dispute resolution
Order Book	Post-graduation trading venue

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Data Flow

Phase 1: Bonding Curve

User Action          Contract State             Result
────────────         ─────────────              ──────
USDC Deposit    →    vNO += amount        →    Soulbound tokens issued
                     vault += amount           (no fees during bonding)
                     vYES = k/vNO
                     
Token Sell      →    vYES += shares       →    USDC returned
                     vNO = k/vYES              (no fees)
                     vault -= payout

Phase 2: Graduation

Trigger                    Process                    Result
───────                    ─────────                  ──────
Solvency ≥100%        →    1. Verify 20% min sides → Tokens become transferable
+ 20% min each side        2. Deduct 2% fee           Order book enabled
                           3. Unlock tokens            Complete Sets active
                           4. Enable order book

Phase 3: Resolution (Winner Profit Guarantee)

Event                  Process                    Result
─────                  ─────────                  ──────
Market End Time   →    Oracle assertion      →   Winners get $1/share + OG bonus
                       Dispute window             Losers receive $0
                       Settlement

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State Machine

Markets progress through a defined lifecycle:

State	Description	Transitions
CREATED	Market initialized	→ BONDING
BONDING	Virtual CPMM active	→ GRADUATED, FAILED
GRADUATED	Real tokens, Order Book trading	→ RESOLVED
FAILED	Solvency not reached	Terminal
RESOLVED	Outcome determined	Terminal
DISPUTED	Oracle dispute active	→ RESOLVED

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Technology Stack

Layer	Technology
Blockchain	Base (Ethereum L2)
Smart Contracts	Solidity 0.8.20
Development Framework	Foundry
Frontend	React + Vite
Web3 Library	Wagmi + Viem
Indexing	The Graph (planned)
Oracle	UMA Optimistic Oracle V3

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Security Architecture

Trust Assumptions

Component	Trust Requirement
Smart Contracts	Code correctness (auditable)
UMA Oracle	Honest majority of voters
Order Book	Contract security
Base L2	Sequencer liveness

Attack Vectors and Mitigations

Vector	Mitigation
Price manipulation	CPMM slippage, fee accumulation
Flash loan attacks	No flash loan integration points
Oracle manipulation	UMA dispute mechanism, bond requirements
Front-running	Slippage tolerance parameters